Molycorp Prices Offerings of Convertible Senior Notes and Common Stock

GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Aug. 17, 2012--
Molycorp, Inc. (NYSE: MCP) (“Molycorp” or the “Company”) today announced
the pricing of its previously announced public offering of $360 million
aggregate principal amount (or up to an aggregate of $414 million
aggregate principal amount if the underwriters of such offering exercise
their over-allotment option in full) of its 6.00% Convertible Senior
Notes due 2017 (the “Notes”) (the “Notes Offering”) and 12,000,000
shares of its common stock (the “Common Stock”) (or up to an aggregate
of 13,800,000 shares of Common Stock if Morgan Stanley & Co. LLC
(“Morgan Stanley”), the underwriter of such offering, exercises its
option to purchase additional shares of Common Stock in full) at a price
per share of $10.00 (the “Primary Shares Offering”) in separate
registered public offerings. The Company expects to close the Notes
Offering and the Primary Shares Offering on August 22, 2012, subject to
satisfaction of customary closing conditions.

The Notes will be Molycorp’s senior unsecured obligations and will bear
interest at a rate of 6.00% per annum, payable semi-annually in arrears
on March 1 and September 1 of each year, commencing on March 1, 2013.
The Notes will mature on September 1, 2017, unless earlier repurchased,
redeemed or converted in accordance with their terms. The Notes will be
convertible at any time prior to 5:00 p.m., New York City time, on the
second scheduled trading day immediately preceding the maturity date
into shares of Common Stock, cash, or a combination thereof, at
Molycorp’s election. The conversion rate will initially be 83.3333
shares of Common Stock per $1,000 principal amount of Notes (equivalent
to an initial conversion price of approximately $12.00 per share of
Common Stock), subject to customary adjustments. Molycorp will have the
right to redeem the Notes on or after September 1, 2015 if the last
reported sale price of its Common Stock has been at least 130% of the
conversion price then in effect for at least 20 trading days (whether or
not consecutive), including the trading day immediately preceding the
date on which Molycorp provides notice of redemption, during any 30
consecutive trading day period ending on, and including, the trading day
immediately preceding the date on which Molycorp provides notice of
redemption.

The Company intends to use the net proceeds received from the Notes
Offering and the Primary Shares Offering to fund operating expenses,
working capital, capital expenditures and any other cash requirements
for the remainder of 2012 and 2013, including without limitation,
capital expenditures at its Mountain Pass facility and other capital
projects, as well as other cash requirements, such as cash payments in
August 2012 to certain holders of the 5% subordinated unsecured
convertible debentures of Molycorp Canada, the Company’s wholly-owned
Canadian subsidiary.

Concurrently with the Notes Offering and the Primary Shares Offering,
the Company has entered into a share lending agreement with Morgan
Stanley Capital Services LLC (“MSCS”), an affiliate of Morgan Stanley,
under which it has agreed to loan to MSCS up to 13,800,000 shares of
Common Stock (the “Borrowed Shares”), of which 7,500,000 shares of
Common Stock were offered through Morgan Stanley at a price per share of
$10.00 (the “Borrowed Shares Offering”) in a registered public offering.
The Company has entered into the share lending agreement to facilitate
the Notes Offering. The Company will not receive any proceeds from the
Borrowed Shares Offering, but the Company will receive a nominal lending
fee from MSCS for the use of the Borrowed Shares, which the Company
intends to use for general corporate purposes.

Morgan Stanley and Credit Suisse Securities (USA) LLC are acting as
joint bookrunners for the Notes Offering, and Morgan Stanley is acting
as sole bookrunner for each of the Primary Shares Offering and the
Borrowed Shares Offering.

Each of the Notes Offering, the Primary Shares Offering and the Borrowed
Shares Offering may be made only by means of a prospectus supplement and
an accompanying prospectus. Copies of the prospectus supplement and the
accompanying prospectus relating to the Notes offering may be obtained
from Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180
Varick Street, Second Floor, New York, NY 10014 (email address: prospectus@morganstanley.com)
or Credit Suisse Securities (USA) LLC, Attention: Prospectus Department,
One Madison Avenue, New York, New York 10010, e-mail: newyork.prospectus@credit-suisse.com
or toll free at (800) 221-1037 and copies of the prospectus supplement
and the accompanying prospectus relating to the Primary Shares Offering
and the Borrowed Shares Offering may be obtained from Morgan Stanley &
Co. LLC, Attention: Prospectus Department, 180 Varick Street, Second
Floor, New York, NY 10014 (email address: prospectus@morganstanley.com).

This news release does not constitute an offer to sell or a solicitation
of an offer to buy any of the Notes, the Common Stock or any other
securities, nor will there be any sale of the Notes, the Common Stock or
any other securities in any state or jurisdiction in which such an
offer, solicitation or sale is not permitted.